-13 92,025 (-700) ZN ,550 (+225) NI

Transcription

1 Monday, July 21 st, As of July O/I (000) MAV MAV MAV CU ,725 (+175) AL ,123,450 (+4975) PB ,025 (-700) ZN ,550 (+225) NI ,728 (-60) SN ,755 (+60) NAA ,540 (-20) NA NA th High Low Close Csh/3 3s/15 LME Stocks (ch) Sup Resis RS Vol (000) Shanghai Nearby Last (Yuan) CU : 62,250 (+180) AL: 19,125 (-135) ZN: 15,265 (+25) Shanghai Stocks as of 07/17/08 CU: 42,935 MT (+4785) AL: 189,094 (+3144) ZN: 70,944 MT (+2705) CU AL PB ZN NI SN 2008 Hi/Lo 8940/ / / / / / Hi/Lo 8335/ / / / / /9849 LME/Shan Cu Arb : 2586 Explanations for our table: High/low/close are official LME prices for the day prior; cash/3 s and the 3 s/15 spreads is the spread between the respective periods, with a positive number reflecting a backwardation and a negative numbers reflecting a contango. Stocks (in MT) show inventories on hand for the current day, along with changes from the day prior. Volume and open interest data are for the day prior, while the MAV refers to the 10, 40, and 100-day moving averages. Shanghai prices are as of close of trading from the day priori; Shanghai stocks are in MT for the week indicated; please contact this writer for any further questions This market comment was written at 8:50 a.m. on July 21 st, US east coast time Base metals finished broadly lower on Friday. Aluminum prices dropped to five-week lows, weighed down by rising stocks and more second thoughts about the sustainability of Chinese production cutbacks announced earlier in the month. In fact, prices are now well below where they were when the Chinese announcement was first made, itself not exactly a vote of confidence in the likelihood of metal being removed from the markets. Admittedly, although China is facing serious power issues (with June power output coming in at its slowest level in more than 6 years), we would suggest that that local demand is also falling, (or would be forced to fall by the government), in effect offsetting the impact of any supply cuts. This morning, we are off to a mostly higher start in metals, as a weaker dollar and higher oil are both pushing prices higher. Energy is up after disappointing results on the weekend Iran talks, while the dollar is down on weekend remarks made by the U.S. Treasury Secretary that the economy is in a ``challenging time'', and probably will show anemic growth for months because of higher oil prices. The pound also fell after an industry report showed U.K. house prices dropped by their greatest monthly amount since 2002, and on comments made by a Bank of England policy maker that the economy is entering a recession that could last more than a year. It will be a light week in terms of US data, with June leading index of economic indicators out later today, (expected at -.1%). The Fed Beige Book comes out on Wednesday, existing home sales for June comes out Thursday, (expected at 4.95 mln units), while June new home sales also comes out Friday (expected at 505,000 units). June durable good numbers (expected at.1%), and Michigan consumer confidence numbers are also out Friday. Despite the early strength in metals, most charts patterns remain uninspiring. Moreover, if oil prices start to fade again, (likely in our view despite the current bounce), the downward pressure on metals could resume. for information purposes only. The report contains information and opinions, which may be used as the basis for trading undertaken by MFG and its officers, employees and associated companies. The report should not be construed as solicitation nor as offering advice for the purposes of the purchase or sale of any security, investment, or derivative. The information and opinions contained in the report were considered by MFG to be valid when issued. The report also contains information provided to MFG by third parties. The source of such information will usually be disclosed in the report. Whilst MFG has taken all reasonable steps to ensure this information is correct, MFG does not offer any warranty as to the accuracy or completeness of such information. Any person placing reliance on the report to undertake trading does so entirely at their own risk and MFG does not accept any liability as a result. Securities and derivatives markets may be subject to rapid and unexpected price movements and past performance is not necessarily a guide to future performance. Registered Office: MF Global UK Limited, Sugar Quay, Lower Thames Street, London, EC3R 6DU. Registered in England No. 1

2 COPPER SUPPORT: $7800 / RESISTANCE: $8350 Copper is at $8150, up $65; there is some minor resistance along the down channel (red line) at $8200, but more formidable resistance is between the $8350-$8400 level. Not much to say on copper today; it likely will be a very quiet session, as the dollar and oil prices set the tone. * A strike planned to start on Monday at Southern Copper's Cuajone mine in Peru has been suspended by the labor union. Cuajone produced 148,939 tons of copper last year, and is Southern's biggest mine in Peru. * The International Copper Study Group released preliminary data for April 2008 on world copper supply and demand showing the market in apparent deficit in April of around 40,000 metric tons. The apparent refined copper balance for the first four months of 2008 indicates a production deficit of about 108,000 tons, compared with a deficit of around 245,000 tons for the same period in (See the full report at the end of our piece). * An armed gang attacked and set fire to a mine exploration rig at the giant Philippines Tampakan copper facility jointly held by Xstrata and Australia s Indophil Resources. It was the latest in a series of attacks on big businesses in the southern Philippines ALUMINUM SUPPORT: $3050 / RESISTANCE: $3250 Ali is at $3030, down $3. Ali not keeping up pace with the rest of the group on account of a weaker Shanghai market and lingering concern about end-user demand. Additionally, an LME stock rise of 4900 MT has brought the two-day increase to just over 9,000 MT. Another close below $3050 today (red line) could result in further pressure in the market and potentially take prices to $2900 level (circled in blue). 2

3 * Daily average primary aluminum output in June rose to 70,700 tons compared with 70,600 in May and 67,800 in June 2007, provisional figures from the International Aluminum Institute (IAI) show. Total June production (30 days) was million tons, compared with million in May (31 days) and million in June ZINC SUPPORT: $1740 / RESISTANCE: $1850 We are at $1842 on zinc, up $22 and are still looking for an eventual retreat to $1740 support. Things look open below that, so that level definitely needs to hold for the longs. 3

4 LEAD SUPPORT: $1750 / RESISTANCE: $2100 We are currently at $2030 on lead, up $60/MT. Our weekly charts show that lead has staged a mini-breakout out of its downchannel, but bulls now need to see prices pull away form the line. Declining stocks and an increase in the number of cancelled warrants is driving the current rally, but whether these gains sustain themselves remains a question. We have our doubts, and suspect that similar to zinc earlier, this could be a rally in a bear market. 4

5 NICKEL SUPPORT: $17000 / RESISTANCE: $22500 We are at $20,600 on nickel, up $200, and still holding above $20,000 mark. However, our charts suggest that we could push lower from here if that psychological level gives way. * Global crude steel output dipped to million tons, down 1% from May, but up 5.9% on the year, as reported by the International Iron and Steel Institute. June s on the month decline is attributed primarily to a dramatic 6.3% decline in U.S. demand and smaller drop the European Union TIN SUPPORT: $22200 / RESISTANCE: $23750 We are currently at $23,375 on tin, down $50; the $23750-$24000 band still shows signs of stiff resistance. 5

6 ICSG PRESS RELEASE Date Issued: 21 st July 2008 Copper: Preliminary Data for April 2008 The International Copper Study Group (ICSG) released preliminary data for April 2008 for world copper supply and demand in its July 2008 Copper Bulletin. The Bulletin is available for sale upon request. According to the preliminary ICSG data, the copper market had an apparent production deficit in April of around 40,000 metric tonnes (t). After making seasonal adjustments for world refined usage and production, however, March showed a surplus of 10,000 t. The apparent refined copper balance for the first four months of 2008, including revisions to data previously presented, indicates a production deficit of about 108,000 t (a seasonally adjusted surplus of 34,000 t). This compares with a production deficit of around 245,000 t (a seasonally adjusted deficit of about 100,000 t) for the same period in World refined copper usage in the first 4 months of 2008 decreased marginally (about 0.5%) compared with usage in the same period of A decrease in apparent usage in the EU-15 countries of 7%, and both China and the United States of 1%, more than offset growth of 3% in Japan, and 3.4% in other countries. Note that China s apparent copper usage is based only on reported data (production + net trade +/- SHFE stock changes) and does not take into account changes in unreported stocks [State Reserve Bureau (SRB), producer, consumer and merchant/trader], which may be significant during periods of stocking or de-stocking. World mines continued to underperform and production decreased by around 3.5% in first 4 months of 2008 compared with production in the same 4 months of 2007: Concentrate production was down by 4% and solvent extraction-electrowinning (SX- EW) production by around 0.5 percent. World production was affected mainly by lower year-on-year output in Australia, Chile, Indonesia and Mexico, where operational problems, labour issues, and/or adverse weather led to an aggregated drop in production of 10.5% (265,000 t copper). As a result, the average global mine capacity utilization rate fell to about 82% in the first 4 months of 2008 from 87.5% in the same period of World refined production in the first 4 months of 2008 increased by 1.7% compared with production in the same period of A growth of 2.6% in electrolytic production more than offset a decline in electrowon production and secondary (from scrap) production of 0.3% and 0.6%, respectively. However, when compared with the average daily production levels of the 4 th quarter of 2007, refined production fell by 1.2%. Decreases occurred in several countries, but mainly in Chile (2.3%) and China (5.3%), where production was affected by operational problems and adverse weather conditions. On a year-on-year basis, refined production decreased in Oceania and the Americas by 11% and 0.9%, respectively, but was up in Africa (6.7%), Asia (4.5%) and Europe (0.6%). The average global refined capacity utilization rate declined to about 82.6% in the first four months of 2008 compared with 84.8% in the same period of The average LME cash price for June 2008 was US$8, per tonne, down from the May average of US$8, per tonne. The 2008 high and low copper prices through end of June were US$8, and US$6, per tonne, respectively, and the average was US$8, per tonne. As of the end June 2008, copper stocks held at the major metal exchanges (LME, COMEX, SHFE) totalled 164,766 t, a decrease of 73,572 t from stocks held at the end of Stocks were down at the LME and SHFE but up at COMEX. World Refined Copper Usage and Supply Trends, Thousand metric tonnes, copper p/ Jan-Apr Jan Feb Mar Apr World Mine Production 13,577 13,757 14,594 14,921 14,983 15,439 5,078 4,908 1,205 1,160 1,273 1,270 World Mine Capacity 15,091 15,280 16,019 16,790 17,111 17,887 5,806 5,983 1,541 1,395 1,547 1,500 Mine Capacity Utilization (%) Primary Refined Production 13,456 13,487 13,858 14,432 14,701 15,308 5,022 5,125 1,278 1,224 1,322 1,301 Secondary Refined Production 1,898 1,788 2,076 2,149 2,622 2, World Refined Production (Secondary+Primary) 15,354 15,275 15,935 16,581 17,323 18,083 5,930 6,028 1,504 1,432 1,555 1,538 World Refinery Capacity 18,266 18,765 19,160 20,231 20,668 21,525 6,995 7,299 1,875 1,700 1,889 1,834 Refineries Capacity Utilization (%) World Refined Usage 1/ 15,231 15,716 16,828 16,730 17,051 18,137 6,174 6,136 1,515 1,467 1,574 1,581 Refined Stocks End of Period 2,048 1, , , Period Stock Change Refined Balance 2/ Seasonally Adjusted Refined Balance 3/ Due to the nature of statistical reporting, the published data should be considered as preliminary as some figures are currently based on estimates and could change. p/ preliminary, 1/ Based on EU apparent usage. 2/ Surplus/deficit is calculated using refined production minus refined usage. 3/ Surplus/deficit is calculated using seasonally adjusted refined production minus seasonally adjusted refined usage.